UNSUSTAINABLE and ILLEGITIMATE DEBT
"We believe that debt transparency should apply to all debt instruments and countries, regardless of income levels... For certain, borrowing governments should be held responsible for contracting and accumulating burdensome and illegitimate debts. But transparency is just as wanting among lenders. In many instances, the weight of culpability and accountability rests primarily and heavily on lenders."
The message expressed by APMDD at the 13th UNCTAD Debt Management Conference held in Geneva last Dec. 5-7 drove home a key critique of lenders demanding debt transparency on the part of borrowers while conveniently excusing themselves from their own guidelines.
APMDD was represented by Mae Buenaventura of the Debt Justice Program in the panel that included Riccardo Boffo, Economist and Financial Analyst (OECD); Yuefen Li, Senior Adviser, South-South Co-operation and Development Finance (South Centre); and Sonja Gibbs, Managing Director and Head of Sustainable Finance, Institute of International Finance (IIF).
The Conference is held regularly as a biennial forum for sharing experiences and exchanging views between governments, international organizations, academia and civil society on debt-related developments in developing countries and on debt management issues in the broader macroeconomic context.
The most recent effort proceeds from the OECD Debt Transparency Initiative which principles drafted without public consultations by the IIF, a group for the financial industry and composed of the world's largest commercial and investment banks. International financial institutions such as the International Monetary Fund and the World Bank, the G20 and the OECD promote these guidelines, ignoring other sets of principles already in place. These include the UNCTAD Principles on Promoting Responsible Sovereign Lending and Borrowing which benefitted from broad participation and consultation with civil society, among them APMDD, media, academe and other stakeholders.
Read the full intervention here.
The Asian Peoples’ Movement on Debt and Development (APMDD) today joined hundreds of organizations worldwide participating in a global week of action to demand debt cancellation amid multiple crises as international lenders led by the World Bank and the International Monetary Fund (IMF) meet in Washington DC for their annual meetings.
Public actions in the Philippines, Nepal, Pakistan, Indonesia and India denounced the failure of lenders to heed the growing demand to cancel the debt in the face of skyrocketing prices of food and fuel and intensifying climate emergency.
Hundreds of Filipino activists marched to the Philippine Senate to call for immediate debt cancellation and the repeal of the Automatic Appropriations Law. Several participants each wore a mock ball and chain around their neck, symbolizing the increasing gravity of the country’s debt burdens.
Freedom from Debt Coalition (FDC) President Rene Ofreneo slammed a decree by the late Ferdinand Marcos Sr. that remains in place, which automatically prioritizes debt payments. “This is a legacy of the Marcos dictatorship that is grossly unjust and must immediately be repealed. The Filipino people do not even know what they are paying for, when these debts were contracted in their name. It’s time for a debt audit to weed out loans that did not benefit us at all. Surely, this is common sense that should be plain to all, not least the current President.”
He cited the record-high national government debt of PhP13.02 trillion as of August. “That’s about PhP127,000 of debt for each Filipino, which will be paid out of public funds at a time when public support for public basic services is urgently needed by our people,” Ofreneo lamented the additional $2 billion added to the Philippines’ debt bill when the newly-installed administration of Ferdinand ‘Bongbong’ Marcos Jr. sold its first global bond.
APMDD Coordinator Lidy Nacpil stated that the Philippines is one of many countries around the world caught in multiple crises of public health, economic recession and climate change. “Mounting debts mean mounting debt service, resulting in cuts to budgets for healthcare, and education, decent housing and other essentials. Burdensome debts are also stopping governments from decisively tackling the climate crisis,” said Lidy Nacpil, APMDD coordinator.
Nacpil cited Sri Lanka, Pakistan, Zambia, Lebanon and Ghana as the most recent examples. “Pakistan, in particular, which has recently experienced devastating floods because of the climate crisis, has seen 33 million people displaced. Yet the government is still expected to pay US$18 billion in debt payments to foreign lenders. This situation cannot continue.”
These are also countries that have been paying debt service and complying with structural adjustments and austerity conditionalities by lenders, despite the budget cuts these entailed in social spending. In Asia, unsustainable debt levels pile up with dire consequences for developmental needs such as in Sri Lanka which defaulted in May, and Pakistan where public funds continue to be siphoned into debt service.
Farooq Tariq, General Secretary of the Pakistan Kissan Rabita Committee said, “As humanitarian organizations scrambled for emergency funds, a familiar face reared its head once more. The IMF, recently approved a bailout request with a plan to release $1.1 billion to the country. At first glance, this may seem like a vital step in Pakistan’s recovery, but to pile further debt on a country already in the grip of a financial crisis will only end in greater disaster and injustice.”
Echoing the global call, protesters stressed that “we will not be held hostage by the lenders and global rule-makers who are leading us down a path towards greater inequality, impoverishment, deprivation and ecocide.” As public institutions, the IMF and the World Bank remain influential peddlers of loans among Global South countries and still fail to account for their responsibility in creating the vulnerabilities to pandemics, economic recessions and climate change.
Quezon City, 9 September – “People are dying from the devastating impacts of the debt crisis and the climate emergency ” said Lidy Nacpil, coordinator of the Asian Peoples’ Movement on Debt and Development (APMDD) as she expressed solidarity with more than 33 million people in Pakistan affected by the unprecedented heavy, continuous monsoon rains and onslaught of flash floods. “Our hearts go out to our fellow Asians who not only suffered great losses, but are also facing a humanitarian crisis of massive proportions as the full extent of this serious climate catastrophe is yet to be revealed.”
Pakistan produces less than 1% of global carbon emissions and yet is one of the countries that bear the worst consequences of the climate crisis. For the past 20 years, it has consistently ranked in the Global Climate Risk Index as among the top ten most vulnerable countries.
Nacpil stressed the urgent call for climate and economic justice for the people of Pakistan, for peoples of other parts of Asia, for the peoples of the Pacific, for Africa, Latin America and the Caribbean and all of the Global South. “Though contributing the least to the climate crisis, their peoples suffer the extreme impacts of the multiple crises including that of climate. The historic monsoon rains, super typhoons and unprecedented heatwaves and other effects of climate change destroy lives, homes and livelihoods, deepen hunger, poverty and inequalities.”
In the midst of the climate crisis and widespread devastation, Pakistan bears a debt burden approaching $250 billion and mounting debt service payments. From July to December 2021 alone, the government paid US$5 billion in debt service to external debt creditors. The US$1.1 billion released by the International Monetary Fund carries austerity conditionalities such as increasing fuel levies and energy tariffs. On top of principal and interest payments, the country had to pay the IMF US$65 million in surcharges (additional interest rates) from 2018 to 2020, and will be charged $392 million more from 2021-2030.
Nacpil reiterated the call for wealthy countries to meet their fair shares of global climate actions, which includes urgent delivery of climate finance. “Fair shares” are based on the UN Climate Convention principle that wealthy countries, or those countries most responsible for the climate crisis, take bold and ambitious actions to reach zero GHG emissions and provide adequate financial resources for developing countries to meet the balance of wealthy countries' fair shares of mitigation actions and enable peoples of developing countries to meet their climate needs.
Nacpil said the climate finance needed is way beyond what the Global North promised in 2009: "The $100B pledge is arbitrary and way below the actual obligations of the rich countries as agreed in the Climate Convention. Trillions of dollars are needed annually by developing countries to adapt to and build resilience in the face of climate change impacts, recover from the loss of lives and damage to property, infrastructure, ecosystems and economies, and ensure a just and equitable transition.
“We also strongly demand debt cancellation for Pakistan, whose people have been staggering under the weight of unjust debt and related burdens including recent waves of economic prescriptions by the IMF.”